Nouns DAO × Octant v2

Integration Plan

Overview

Nouns DAO will integrate with Octant v2 through the Lido Yield Skimming Strategy — an ERC-4626 vault that captures yield from wstETH exchange rate appreciation (~3-5% APY from ETH staking rewards).

Component Purpose Capital
Lido Yield Skimming Strategy Generate yield for public goods funding wstETH held by treasury

Architecture Note: The strategy IS the ERC-4626 vault. No MultistrategyVault wrapper is needed since only one strategy is approved by the DAO. This simplifies deployment, reduces gas costs, and eliminates unnecessary complexity.

Prerequisites (Pending Items)

The following items must be resolved before executing the DAO proposal:

Item Status Owner Notes
Dragon Funding Pool address ⏳ Pending Nouns DAO Strategy donation recipient (PaymentSplitter)
Keeper Bot address ⏳ Pending Nouns DAO Strategy keeper for harvesting
Emergency Shutdown Admin address ⏳ Pending Nouns DAO Can shutdown strategy and perform emergency withdrawals
wstETH deposit amount ⏳ Pending Nouns DAO Amount of wstETH to deposit (treasury holds ~1,725 wstETH)

⚠️ Action Required: Update this document with actual addresses before submitting the proposal.

Open Questions for Nouns DAO

The following questions need to be answered by the Nouns DAO team before finalizing the proposal:

Question Context Status
wstETH deposit amount How much wstETH does Nouns DAO want to deposit into the strategy? Treasury holds ~1,725 wstETH. ⏳ Pending
Proposal UI format The deployment requires 4 transactions. In the Nouns DAO UI (nouns.wtf/vote), will this be:
Option A: 4 separate calldata entries (one per transaction), or
Option B: 1 batched calldata containing all 4 transactions?		 ⏳ Pending
Keeper operator Who will operate the Keeper bot? Options: Nouns DAO team, Golem Foundation, third-party service ⏳ Pending
Emergency Admin setup Who should be the Emergency Admin? Recommend a trusted multisig (2-of-3 or 3-of-5) for rapid response ⏳ Pending

Note: The script can generate output for both proposal formats (individual transactions or batched). Confirm the preferred format before generating final calldata.

Verified On-Chain Addresses

Entity Address Network
Nouns DAO Treasury (Executor/Timelock) 0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71 Ethereum
Nouns DAO Governor Proxy 0x6f3E6272A167e8AcCb32072d08E0957F9c79223d Ethereum
Nouns NFT Token 0x9C8fF314C9Bc7F6e59A9d9225Fb22946427eDC03 Ethereum
wstETH 0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0 Ethereum
PaymentSplitter Factory 0x5711765E0756B45224fc1FdA1B41ab344682bBcb Ethereum

Contracts To Be Deployed

The following contracts must be deployed to mainnet before the DAO proposal:

Contract Purpose Status
YieldSkimmingTokenizedStrategy Base implementation for yield-skimming strategies ⏳ Pending deployment
LidoStrategyFactory Factory for deploying LidoStrategy instances via CREATE2 ⏳ Pending deployment

Note: These contracts will be deployed by the Golem Foundation team. Addresses will be updated here once deployed.

Lido Yield Skimming Strategy

The LidoStrategy is an ERC-4626 vault (via Yearn's TokenizedStrategy) that tracks wstETH → stETH exchange rate appreciation. Treasury deposits wstETH directly into the strategy.

Underlying Yield Source

wstETH (Wrapped Staked ETH) — Lido's non-rebasing wrapper around stETH.

  • Mechanism: Exchange rate increases as staking rewards accrue to stETH
  • Rate Source: wstETH.stEthPerToken() (manipulation-resistant, oracle-free)
  • Yield: ~3-5% APY from ETH validator staking rewards
  • Risk: ETH validator slashing can reduce exchange rate

Yield Capture Mechanism

┌──────────────────────────────────────────────────────────────────────────────┐ │ 1. User deposits 100 wstETH at rate 1.0 (100 stETH value) │ │ │ │ │ ▼ │ │ 2. Exchange rate increases to 1.05 (ETH staking rewards) │ │ - Vault value: 100 wstETH × 1.05 = 105 stETH value │ │ - User debt: 100 stETH value │ │ - Profit: 5 stETH value │ │ │ │ │ ▼ │ │ 3. On report(), strategy mints 5 value-shares to Dragon Router │ │ - User can still redeem 100 stETH value worth of wstETH │ │ - Dragon Router receives yield without diluting user │ └──────────────────────────────────────────────────────────────────────────────┘

Role Assignments

Role Assigned To Description
Management Nouns DAO Treasury (0xb1a3...ef71) Administrative role (set keeper, set emergency admin, shutdown)
Keeper Dedicated Bot/EOA REQUIRED: Authorized to call report() to harvest yields without governance votes
Emergency Admin Nouns DAO Treasury (0xb1a3...ef71) Can shutdown the strategy and perform emergency withdrawals

Critical: The Keeper should be a dedicated EOA or bot, NOT the Treasury. Assigning Keeper to Treasury would require a governance vote for every harvest (7+ day minimum voting cycle), creating severe operational bottlenecks.

Yield Distribution

Destination Allocation
Dragon Funding Pool 100%

Strategy Configuration Parameters

_enableBurning

The _enableBurning parameter controls whether the strategy can burn Dragon shares to cover losses.

Value Behavior
false Dragon shares are never burned. If the strategy incurs a loss (e.g., wstETH exchange rate decreases due to slashing), the loss is socialized among all depositors. Dragon operations are blocked if the vault cannot cover user debt.
true Dragon shares can be burned to cover losses before affecting user principal. Provides additional protection for depositors but reduces Dragon's accumulated yield.

Recommendation: Set to false for Nouns DAO. Lido slashing events are extremely rare, and disabling burning simplifies accounting while ensuring Dragon receives all earned yield.

Changing the Donation Address (Dragon Router)

The donation address can be changed after deployment, but it requires a two-step process with a mandatory 14-day cooldown. This protects depositors by giving them time to exit if they disagree with the change.

Step 1: Initiate Change (Management only)

Target:   [STRATEGY_ADDRESS]
Function: setDragonRouter(address)
Selector: 0x59bd9f07
Value:    0

Parameters:
  _dragonRouter: [NEW_PAYMENT_SPLITTER_ADDRESS]

Access: Management only (requires governance vote)
Effect: Starts 14-day cooldown, emits PendingDragonRouterChange event

Step 2: Wait 14 Days (Cooldown Period)

During this period:

  • Users can see the pending change via pendingDragonRouter() and dragonRouterChangeTimestamp()
  • Users who disagree can withdraw their funds
  • Management can cancel via cancelDragonRouterChange() if needed

Step 3: Finalize Change (Permissionless)

Target:   [STRATEGY_ADDRESS]
Function: finalizeDragonRouterChange()
Selector: 0x0e98ea4e
Value:    0

Parameters: (none)

Access: Anyone (permissionless after cooldown)
Effect: Applies the new dragon router address

Cancel Pending Change (Optional)

Target:   [STRATEGY_ADDRESS]
Function: cancelDragonRouterChange()
Selector: 0x940be647
Value:    0

Parameters: (none)

Access: Management only
Effect: Cancels pending change, resets cooldown

Timeline: A dragon router change requires ~21 days total:

  • ~7 days for governance proposal (propose → vote → queue → execute)
  • 14 days mandatory cooldown
  • Then anyone can finalize

PaymentSplitter (Dragon Funding Pool)

The PaymentSplitter is deployed via the existing factory and receives yield from the strategy.

Recommended Configuration

Payee Allocation Purpose
Nouns Ecosystem Grants 100% Public goods funding

Note: Multiple payees with different allocations can be configured if desired (e.g., 80% grants, 20% operations).

Nouns DAO Governance

Architecture

Nouns DAO uses a Governor + Timelock pattern with NFT-based voting:

Component Address / Value
Governor Proxy 0x6f3E6272A167e8AcCb32072d08E0957F9c79223d
Executor (Timelock) 0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71
Voting Token Nouns NFT (0x9C8fF314...DC03)

Proposal Lifecycle

A Nouns DAO proposal goes through several stages before execution:

┌──────────────────────────────────────────────────────────────────────────────┐ │ NOUNS DAO PROPOSAL LIFECYCLE │ ├──────────────────────────────────────────────────────────────────────────────┤ │ │ │ ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ ┌─────────────┐ │ │ │ PROPOSE │───▶│ VOTE │───▶│ QUEUE │───▶│ EXECUTE │ │ │ │ (~2 days) │ │ (~3 days) │ │ (~2 days) │ │ (anytime) │ │ │ └─────────────┘ └─────────────┘ └─────────────┘ └─────────────┘ │ │ │ │ 1. PROPOSE 2. VOTE 3. QUEUE 4. EXECUTE │ │ ───────────── ───────────── ───────────── ───────────── │ │ - Proposer - Noun holders - Proposal auto- - Anyone can │ │ submits cast votes queued in call execute │ │ proposal - For/Against/ timelock - Timelock │ │ - Voting delay Abstain - Waiting period executes txs │ │ begins - Quorum needed before exec - msg.sender = │ │ Timelock │ │ │ │ Total time from proposal to execution: ~7 days minimum │ └──────────────────────────────────────────────────────────────────────────────┘

Execution Call Chain

┌──────────────────────────────────────────────────────────────────────────────┐ │ Step 1: Any EOA calls Governor to execute passed proposal │ │ execute(targets[], values[], calldatas[], descriptionHash) │ │ │ │ │ ▼ │ │ ┌────────────────────────────────────────────────────────────────────────┐ │ │ │ Nouns DAO Governor (0x6f3E6272A167e8AcCb32072d08E0957F9c79223d) │ │ │ └────────────────────────────────────────────────────────────────────────┘ │ │ │ │ │ Step 2: Governor triggers queued transaction on Timelock │ │ execute(target, value, data, predecessor, salt) │ │ │ │ │ ▼ │ │ ┌────────────────────────────────────────────────────────────────────────┐ │ │ │ Executor / Timelock (0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71) │ │ │ └────────────────────────────────────────────────────────────────────────┘ │ │ │ │ │ Step 3: Timelock executes transaction to target contract │ │ msg.sender = Timelock (0xb1a3...) │ │ │ │ │ ▼ │ │ ┌────────────────────────────────────────────────────────────────────────┐ │ │ │ Target Contract (Factory / wstETH / Strategy) │ │ │ └────────────────────────────────────────────────────────────────────────┘ │ └──────────────────────────────────────────────────────────────────────────────┘

Critical: From the target contract's perspective, msg.sender is the Executor/Timelock address (0xb1a3...), NOT the Governor. This is why all roles are assigned to the Executor address.

Governance Parameters

See current governance parameters on nouns.wtf/vote.

Voting Platforms

Platform Type Use Case
nouns.wtf/vote On-chain Treasury transactions, contract interactions
Discourse Forum Discussion, temperature checks

Execution Playbook

The full deployment can be executed in a single DAO proposal with 4 batched transactions:

  1. Deploy PaymentSplitter via Factory
  2. Deploy LidoStrategy via Factory
  3. Approve wstETH to Strategy
  4. Deposit wstETH into Strategy

Prerequisites: Before submitting the proposal:

  • YieldSkimmingTokenizedStrategy must be deployed to mainnet
  • LidoStrategyFactory must be deployed to mainnet
  • Strategy factory uses CREATE2, allowing address precomputation

Step 1: Create Proposal

1.1 — Navigate to Nouns DAO

Open nouns.wtf/vote

1.2 — Connect Wallet

Connect a wallet with sufficient voting power (own or delegated Nouns).

1.3 — Click "Submit Proposal"

Navigate to the proposals section and initiate a new proposal.

1.4 — Fill Proposal Details

Field Value
Title Deploy Octant Lido Yield Strategy for wstETH
Description See Proposal Template below

1.5 — Add Transaction 1: Deploy PaymentSplitter

Field Value
Target Contract 0x5711765E0756B45224fc1FdA1B41ab344682bBcb (PaymentSplitter Factory)
Function createPaymentSplitter(address[],string[],uint256[])
payees [[GRANT_RECIPIENT_ADDRESS]]
payeeNames ["NounsGrants"]
shares [100]

1.6 — Add Transaction 2: Deploy Strategy

Field Value
Target Contract [LIDO_STRATEGY_FACTORY_ADDRESS]
Function createStrategy(string,address,address,address,address,bool,address)
_name NounsLidoStrategy
_management 0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71
_keeper [KEEPER_BOT_ADDRESS] (dedicated bot/EOA)
_emergencyAdmin [EMERGENCY_ADMIN_ADDRESS] (dedicated multisig/EOA, NOT Treasury)
_donationAddress [PAYMENT_SPLITTER_ADDRESS] (from Tx 1)
_enableBurning false
_tokenizedStrategyAddress [YIELD_SKIMMING_TOKENIZED_STRATEGY_ADDRESS]

1.7 — Add Transaction 3: Approve wstETH

Field Value
Target Contract 0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0 (wstETH)
Function approve(address spender, uint256 amount)
spender [STRATEGY_ADDRESS] (from Tx 2)
amount [DEPOSIT_AMOUNT] (e.g., 1000e18 for 1000 wstETH)

1.8 — Add Transaction 4: Deposit wstETH

Field Value
Target Contract [STRATEGY_ADDRESS] (from Tx 2)
Function deposit(uint256 assets, address receiver)
assets [DEPOSIT_AMOUNT] (e.g., 1000e18 for 1000 wstETH)
receiver 0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71

1.9 — Submit Proposal

Review all details and submit the proposal.

Gas Profile

Component Gas Cost
PaymentSplitter Deployment ~50k
LidoStrategy Deployment ~3-4M
wstETH Approve ~50k
wstETH Deposit ~200k
Total (batched) ~4M
Limit Value Notes
Per-Transaction Gas Limit 16,777,216 (2²⁴) Hard cap via EIP-7825 (Fusaka upgrade)
Block Gas Limit 30M Maximum per block
Headroom >75% Proposal well within limits

Note: The Ethereum "Fusaka" upgrade introduced a per-transaction gas cap of 16,777,216 gas (2²⁴) via EIP-7825. This is a hard protocol limit distinct from the block gas limit. Our ~4M total is safely within this cap.

Step 2: Vote

  1. Share the proposal link on Discourse for discussion
  2. Noun holders vote during the voting period (~3 days)
  3. Proposal passes if quorum is met and majority votes "For"

Step 3: Queue

Once voting passes, the proposal enters the timelock queue (~2 days).

Step 4: Execute

After the timelock delay:

  1. Return to the proposal page on nouns.wtf
  2. Click "Execute" (available after timelock)
  3. Sign the execution transaction
  4. Verify on Etherscan that all transactions succeeded

Step 5: Verify Deployment

After execution, verify:

  • ☐ PaymentSplitter deployed with correct payees
  • ☐ Strategy deployed with correct donation address (PaymentSplitter)
  • ☐ Treasury received strategy shares
  • ☐ wstETH deposited into strategy

Proposal Template

## Summary

This proposal deploys the Octant Lido Yield Skimming Strategy and deposits
[AMOUNT] wstETH from Nouns DAO treasury as part of the Octant v2 pilot.

## Background

Octant v2 enables DAOs to optimize treasury yield while funding public goods.
The Lido strategy captures yield from wstETH exchange rate appreciation
(~3-5% annually from ETH staking rewards) and routes it to designated recipients.

## Transactions (4 total)

1. **Deploy PaymentSplitter**: Create yield distribution splitter for grants
2. **Deploy Strategy**: Create ERC-4626 yield-skimming strategy
3. **Approve wstETH**: Allow Strategy to spend treasury wstETH
4. **Deposit wstETH**: Deposit wstETH, receiving shares to Treasury

## Architecture

The LidoStrategy IS the ERC-4626 vault (via Yearn's TokenizedStrategy).
No additional vault wrapper is needed since only one strategy is approved.

## Yield Distribution

- 100% → Dragon Funding Pool → Nouns Ecosystem Grants

## Risk Considerations

- Underlying: wstETH (Lido wrapped staked ETH)
- Exchange Rate Risk: ETH validator slashing could reduce rate (rare)
- Custody: Treasury retains full share ownership
- Liquidity: Instant withdrawals (no lockup period)

## Links

- [wstETH Token](https://etherscan.io/token/0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0)
- [Nouns Treasury](https://etherscan.io/address/0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71)
- [PaymentSplitter Factory](https://etherscan.io/address/0x5711765E0756B45224fc1FdA1B41ab344682bBcb)

Prepared Calldata

Complete transaction calldata can be generated programmatically using the provided script:

forge script partners/nouns_dao/script/GenerateProposalCalldata.s.sol --fork-url $ETH_RPC_URL -vvvv

Before running, update the configuration in the script:

  • LIDO_STRATEGY_FACTORY — LidoStrategyFactory address (after deployment)
  • TOKENIZED_STRATEGY — YieldSkimmingTokenizedStrategy address (after deployment)
  • DRAGON_FUNDING_POOL — Actual grant recipient address
  • KEEPER_BOT — Dedicated keeper EOA/bot address
  • EMERGENCY_ADMIN — Emergency shutdown admin address (dedicated multisig/EOA, NOT Treasury)
  • DEPOSIT_AMOUNT — Amount of wstETH to deposit

The script outputs:

  • Precomputed CREATE2 address for Strategy
  • Individual calldata for each transaction (TX 0-3)
  • Formatted parameters for nouns.wtf proposal UI

Transaction 1: Deploy PaymentSplitter

Function: createPaymentSplitter(address[],string[],uint256[]) Selector: 0x7a0b30f3 Value: 0 Parameters: payees: [[GRANT_RECIPIENT_ADDRESS]] payeeNames: ["NounsGrants"] shares: [100]

Transaction 2: Deploy Strategy

Target:   [LIDO_STRATEGY_FACTORY_ADDRESS]
Function: createStrategy(string,address,address,address,address,bool,address)
Selector: 0x31d89943
Value:    0

Parameters:
  _name:                     "NounsLidoStrategy"
  _management:               0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71
  _keeper:                   [KEEPER_ADDRESS] (dedicated bot)
  _emergencyAdmin:           [EMERGENCY_ADMIN_ADDRESS]
  _donationAddress:          [PAYMENT_SPLITTER_ADDRESS]
  _enableBurning:            false
  _tokenizedStrategyAddress: 0x8cf7246a74704bBE59c9dF614ccB5e3d9717d8Ac

Transaction 3: Approve wstETH

Target:   0x7f39C581F595B53c5cb19bD0b3f8dA6c935E2Ca0 (wstETH)
Function: approve(address,uint256)
Selector: 0x095ea7b3
Value:    0

Parameters:
  spender: [STRATEGY_ADDRESS] (from Tx 2)
  amount:  [DEPOSIT_AMOUNT] (e.g., 1000000000000000000000 for 1000 wstETH)

Transaction 4: Deposit wstETH

Target:   [STRATEGY_ADDRESS] (from Tx 2)
Function: deposit(uint256,address)
Selector: 0x6e553f65
Value:    0

Parameters:
  assets:   [DEPOSIT_AMOUNT] (e.g., 1000000000000000000000 for 1000 wstETH)
  receiver: 0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71 (Treasury)

Post-Deployment Operations

Harvest Operation

Report (Harvest Yield)

Target:   [STRATEGY_ADDRESS]
Function: report()
Selector: 0x2606a10b
Value:    0

Parameters: (none)

Note: Called by management or keeper to harvest yield. Returns (uint256 profit, uint256 loss).
Mints profit shares to Dragon Router (PaymentSplitter).

Release Yield from PaymentSplitter

Step 1: Release strategy shares to payee

Target:   [PAYMENT_SPLITTER_ADDRESS]
Function: release(address token, address account)
Selector: 0x48b75044
Value:    0

Parameters:
  token:   [STRATEGY_ADDRESS] (strategy shares)
  account: [PAYEE_ADDRESS]

Note: Anyone can call this function. Transfers accumulated strategy shares to the payee.

Step 2: Payee redeems shares for wstETH

After receiving strategy shares, the payee must redeem them for underlying wstETH:

Target:   [STRATEGY_ADDRESS]
Function: redeem(uint256 shares, address receiver, address owner)
Selector: 0xba087652
Value:    0

Parameters:
  shares:   Amount of strategy shares to redeem
  receiver: Address to receive wstETH
  owner:    Payee's address (msg.sender)

Note: Only the payee (share owner) can redeem their own shares.

Important: The release() function only transfers strategy shares to the payee. The payee must then call redeem() on the strategy contract to convert those shares into actual wstETH.

Emergency Operations

Shutdown Strategy

Target:   [STRATEGY_ADDRESS]
Function: shutdownStrategy()
Selector: 0xbe8f1668

Effect: Stops new deposits/mints, allows withdrawals.
Access:  management or emergencyAdmin

Emergency Withdraw

Target:   [STRATEGY_ADDRESS]
Function: emergencyWithdraw(uint256)
Selector: 0x5312ea8e

Parameters:
  _amount: Amount to withdraw (up to full balance)

Prerequisite: Strategy must be shutdown first.
Access:       management or emergencyAdmin

Standard Withdraw

Target:   [STRATEGY_ADDRESS]
Function: withdraw(uint256,address,address)
Selector: 0xb460af94
Value:    0

Parameters:
  assets:   Amount of wstETH to withdraw
  receiver: Address to receive wstETH
  owner:    0xb1a32FC9F9D8b2cf86C068Cae13108809547ef71 (Treasury)

Note: Can be called anytime, no lockup period.

Quick Reference: Function Selectors

Function Selector Target Purpose
createPaymentSplitter(...)0x7a0b30f3PaymentSplitter FactoryDeploy splitter
createStrategy(...)0x31d89943LidoStrategy FactoryDeploy strategy
approve(address,uint256)0x095ea7b3wstETHAllow spending
deposit(uint256,address)0x6e553f65StrategyDeposit funds
withdraw(uint256,address,address)0xb460af94StrategyWithdraw funds
report()0x2606a10bStrategyHarvest yield
shutdownStrategy()0xbe8f1668StrategyEmergency shutdown
emergencyWithdraw(uint256)0x5312ea8eStrategyEmergency exit

Operational Considerations

Keeper Setup

See Role Assignments for Keeper requirements. A dedicated EOA or bot enables autonomous harvesting without governance votes.

Recommended: Set up a keeper bot to call report() periodically (e.g., weekly or monthly) to:

  1. Update accounting
  2. Mint yield shares to Dragon Router
  3. Keep exchange rate tracking accurate

Emergency Admin

The Treasury serves as Emergency Admin. Emergency actions (shutdown, forced withdrawals) will follow standard DAO voting timelines (~7 days) unless a separate multisig is designated for faster response.

Withdrawals

The strategy provides instant liquidity (no lockup). Withdrawals are straightforward:

  1. Call withdraw(assets, receiver, owner) or redeem(shares, receiver, owner) on the strategy
  2. Receive underlying wstETH immediately

No unwinding of positions is needed — wstETH is held directly.

Value Debt Tracking

The strategy uses a dual-debt accounting system:

  • User Debt: Tracks ETH value owed to depositors
  • Dragon Debt: Tracks ETH value owed to Dragon Router (yield recipient)

This ensures:

  • Users can always redeem their original value
  • Dragon Router only receives actual profit
  • Insolvency protection: Dragon operations blocked if vault can't cover user debt

Treasury Holdings (Reference)

Current Nouns DAO treasury holdings (as of snapshot):

Asset Amount Value (USD)
wstETH ~1,725 ~$6.7M
rETH ~163 ~$600k
USDC ~726k ~$726k
ETH ~517 ~$1.6M

Source: Etherscan Treasury

References